For all the emphasis on net worth or market share, many entrepreneurs and founders rarely see wealth as the numbers indicate. It’s always tied up in assets, which are then hedged or used for leverage in an endless cycle. Of course, while a lot can be achieved in this way, you often need cold, hard cash for a variety of scenarios.
As such, the value of liquidity is never going to disappear. In fact, it’s something that businesses around the world are recognizing that they need to focus on more. After all, we’ve seen it become a critical factor for countless industries during the COVID-19 pandemic as well as in the present day, with AI investments.
In this article, let’s find out why securing liquidity is a high priority for entrepreneurs.
It’s Easier for Businesses To Understand Liquidity in 2025
Today, it’s incredibly simple to get an immediate understanding of not only your liquidity but also the implications it has. Ultimately, the first step in this process is being aware of your business’s current ratio.
As Business Insider explains, finding your current ratio is a great way to find out how liquid your assets are. You do this by dividing your current assets by your current liabilities. According to Ben Richmond, country manager for Xero, in most cases, a current ratio between 1.5 and 3 is ‘acceptable’.
After that, tons of accounting tools and dashboards make liquidity extremely easy to monitor. Today, it’s possible to set up automated alerts in case actions have caused liquidity to drop, so you’re not stressed when you actually need liquidity.
You can also run scenarios, which tends to be more common among mid-sized businesses. These might involve concepts like “What happens to liquidity if sales drop 15% next quarter?” As you can imagine, they’re super helpful in understanding where your business stands in different situations in terms of liquidity.
New Forms of Liquidity Are Waiting To Be Taken Advantage Of
Something that many businesses are beginning to realize is that liquidity can be unlocked from more avenues than before. In fact, there are so many options available now that managing them can be overwhelming.
According to the Association for Financial Professionals, treasury management is critical because companies only have a finite amount of liquid assets, regardless of success. As such, one of the key goals of treasury management doesn’t just involve cash, but also access to medium and long-term debt and equity financing.
In other words, easy liquidity also includes your ability to raise more cash at the right time. With blockchain and cryptocurrency having increasing acceptance and legitimacy, they too are finding a place in this picture.
However, many companies that want to get into blockchain and crypto don’t want to hold or deal with it directly. This is why they might choose to invest in a Bitcoin or Ethereum treasury management firm, which gives them exposure without any of the management complexity.
As Bit Digital explains, with some management firms, there’s even a non-dilutive capital lever that ensures a stakeholder’s per-ETH ownership isn’t affected by ETH dilution risks. As you can see, these are options that didn’t exist for companies ten years ago, and they’re only going to get more prevalent now.
Markets Move a Lot Faster, Which Means Agility Is Critical
Another reason why liquidity has become so important today is the way growth opportunities are becoming even more time-sensitive than before. Take the recent situation with memory components. AI’s demand for memory has caused Micron, parent company of Crucial, to pull out of the consumer market to focus on catering to AI clients. That leaves only Samsung and SK Hynix as the only manufacturers of consumer RAM.
While it’s a huge blow for consumers and Micron isn’t going to win any popularity awards for their choice, it’s a win for the shareholders. That said, pivots like the one Micron has made only happen when you have liquidity to suddenly change directions on short notice.
Even on a smaller scale, easy liquidity allows mom-and-pop businesses to take advantage of discounted wholesale products and stock up extra. So, liquidity has always been a benefit, but with how fast things are moving thanks to AI, it has now become almost a necessity.
Long story short, entrepreneurs and business owners have always known the importance of liquidity. However, it’s only in recent years that it’s become clear just how important it is to fund decisions at the right time. Yes, loans and other forms of funding are always going to exist, but nothing beats being able to dip into your own treasury to make no-strings-attached investments.
